TABLE OF CONTENTS Foreword... 3 Acknowledgements... 4 Executive summary... 13 The role of renewables in the energy mix continued to expand in 2013... 13 Strong market drivers, but increased risks for renewable power deployment ahead... 14 Higher renewable electricity deployment possible under enhanced case conditions... 17 Improving competitiveness, but market and policy frameworks keys for investment... 18 Biofuels for transport and renewable heat expanding, though with challenges... 20 Renewables at risk of falling short versus long-term clean energy scenarios... 21 References... 23 Analytical framework... 24 Renewable energy data present unique challenges... 24 Country-level approach underpins the renewable electricity analysis... 24 Outlooks for technology and investment guide the global picture... 26 Biofuels for transport and renewable heat round out the analysis... 26 References... 28 Renewable electricity: OECD... 29 Summary... 29 OECD Americas... 31 OECD Asia Oceania... 45 OECD Europe... 56 References... 72 Renewable electricity: Non-OECD... 75 Summary... 75 Africa... 77 Asia... 90 China... 102 Europe and Eurasia... 111 Middle East... 118 Non-OECD Americas... 125 References... 134 Renewable electricity: Global technologies... 138 Summary... 138 Global trends in renewable power: Geographical diffusion... 140 Global trends in renewable power: Economic competitiveness... 141 6 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014
Bioenergy for power... 144 Geothermal power... 148 Hydropower... 149 Ocean power... 154 Offshore wind... 157 Onshore wind... 161 Solar PV... 166 Special focus: Solar PV reaching socket parity... 177 STE... 189 References... 193 Investment in renewable power... 197 Summary... 197 Trends in renewable electricity capacity investment... 198 Medium-term outlook for investment in new renewable power capacity... 205 References... 207 Renewable heat... 208 Summary... 208 Total FEH today... 209 Renewable energy use for heat: Market trends, forecast and policy frameworks... 210 Renewable heating technologies... 219 References... 228 Renewable transport... 230 Summary... 230 Global overview... 231 Regional forecasts... 235 Advanced biofuels industry... 244 References... 245 TABLES... 247 Glossary of definitions, terms and abbreviations... 252 LIST OF FIGURES Figure 1 Global renewable electricity production by region, historical and projected... 13 Figure 2 Cumulative change in gross power generation by source and region, 2013-20... 15 Figure 3 Renewable electricity annual net capacity additions, historical and projected... 16 Figure 4 World renewable power capacity, baseline and enhanced case projections... 17 Figure 5 Weighted average annual renewable investment costs, historical and projected... 19 Figure 6 Levelised costs of electricity (USD per megawatt hour [MWh]), beginning year... 19 Figure 7 World biofuels production, historical and projected... 20 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014 7
Figure 8 World final renewable energy use for heat (including commercial heat) 2007-20... 21 Figure 9 Global renewable electricity generation, the MTRMR 2014 forecast versus ETP 2014 2DS... 22 Figure 10 Cumulative investment in new renewable power capacity... 22 Figure 11 OECD renewable electricity net capacity additions and projection (gigawatts [GW])... 29 Figure 12 OECD renewable electricity generation and projection (TWh)... 30 Figure 13 OECD Americas projected shares of power mix and renewable generation... 32 Figure 14 OECD Americas historical and projected renewable annual capacity additions... 33 Figure 15 OECD Americas power demand versus GDP growth... 34 Figure 16 OECD Americas total power capacity versus peak load, 2012... 35 Figure 17 United States land-based wind LCOE ranges versus selected average wholesale prices.. 41 Figure 18 OECD Asia Oceania power generation mix and renewable generation... 46 Figure 19 OECD Asia Oceania historical and projected renewable capacity additions... 46 Figure 20 Asia Oceania countries power demand versus GDP growth... 47 Figure 21 Asia Oceania total power capacity versus peak demand... 48 Figure 22 Japan planned solar PV capacity by prefecture, March 2014... 50 Figure 23 Japan solar PV LCOE ranges versus FIT and end-user price levels... 52 Figure 24 OECD Europe projected shares of power mix and renewable generation... 58 Figure 25 OECD Europe historical and projected renewable capacity additions... 58 Figure 26 OECD Europe countries power demand versus GDP growth... 59 Figure 27 OECD Europe countries total power capacity versus peak load, 2012... 60 Figure 28 EU-28 renewable electricity generation and projection and NREAPs in 2020... 62 Figure 29 Current and projected annual generation shares of wind and solar PV... 65 Figure 30 Germany estimated levelised costs of power generation ranges, beginning year... 69 Figure 31 Non-OECD renewable net electricity capacity additions and projection (GW)... 75 Figure 32 Non-OECD renewable electricity generation and projection (TWh)... 76 Figure 33 Africa projected shares of power mix and renewable generation... 78 Figure 34 Africa historical and projected capacity additions... 79 Figure 35 Africa selected countries power demand (left axis) versus demand growth and GDP growth (right axis)... 80 Figure 36 Africa selected countries total power capacity versus peak demand... 82 Figure 37 South Africa awarded and remaining capacity and tender prices under REIPPP... 87 Figure 38 Asia projected shares of power mix and renewable generation... 91 Figure 39 Asia historical and projected renewable capacity additions... 92 Figure 40 Asia countries power demand versus demand growth and GDP growth... 92 Figure 41 Indonesia power generation by source and renewable share of total... 94 Figure 42 India LCOE of onshore wind and solar PV versus power market price and renewable energy certificates (RECs)... 98 Figure 43 China projected shares of power mix and renewable generation... 103 Figure 44 China historical and projected renewable capacity additions... 103 Figure 45 China power demand versus GDP growth... 104 Figure 46 China power generation by source and renewable share of total... 105 Figure 47 Non-OECD Europe and Eurasia power generation mix and renewable generation... 112 Figure 48 Non-OECD Europe and Eurasia historical and projected renewable capacity additions... 112 Figure 49 Non-OECD Europe and Eurasia power demand versus GDP growth... 113 Figure 50 Middle East projected shares of power mix and renewable generation... 119 Figure 51 Middle East historical and projected renewable capacity additions... 119 8 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014
Figure 52 Middle East countries power demand versus GDP growth... 120 Figure 53 Saudi Arabia power generation by source... 121 Figure 54 Non-OECD Americas projected shares of power mix and renewable generation... 126 Figure 55 Non-OECD Americas historical and projected renewable capacity additions... 127 Figure 56 Non-OECD Americas power demand growth... 127 Figure 57 Brazil energy auction results in 2013, tendered capacity... 130 Figure 58 World renewable electricity generation, historical and projected... 139 Figure 59 World renewable electricity net annual capacity additions, historical and projected... 139 Figure 60 World renewable power capacity, baseline and enhanced case projections... 140 Figure 61 Number of countries with non-hydro renewable capacity above 100 MW... 141 Figure 62 Historical and forecasted LCOEs (USD per megawatt hour [MWh]), beginning year... 142 Figure 63 Bioenergy power generation and projection by region... 145 Figure 64 Global wood pellet production 2000-12 (left) and wood pellet consumption by energy sector in the major consuming countries in the European Union 2012 (right).. 146 Figure 65 Geothermal power capacity and projection by region (TWh)... 149 Figure 66 Shares of PSP capacity in hydropower capacity in selected OECD countries in 2002 and 2012 (left) and share of mixed and pure PSP capacity in the OECD total 1995-2012 (right).. 151 Figure 67 Hydropower capacity and projection by region... 153 Figure 68 Hydropower generation and projection by region... 153 Figure 69 Ocean power generation and projection by region... 156 Figure 70 Historical and projected system costs for typical offshore systems, beginning year... 158 Figure 71 Historical and projected LCOEs of typical offshore systems, beginning year... 159 Figure 72 Offshore wind generation projection by region (TWh)... 160 Figure 73 Equity market performance of selected wind turbine manufacturers... 161 Figure 74 Chinese wind turbine exports by company and destination 2012-13... 162 Figure 75 Typical onshore wind total investment costs per kw in selected countries (2006-20).. 163 Figure 76 Historical and projected LCOEs for typical onshore systems, beginning year... 163 Figure 77 Onshore wind annual capacity additions by region (GW)... 164 Figure 78 Onshore wind generation projection by region (TWh)... 165 Figure 79 Typical solar PV system prices, by segment, beginning year... 166 Figure 80 Cost breakdown of solar PV system prices in Italy, Japan and the United States... 168 Figure 81 Historical and projected typical solar PV investment costs, beginning year... 169 Figure 82 Historical and projected LCOEs for typical solar PV systems, beginning year... 170 Figure 83 Solar PV manufacturer shipments by region versus total manufacturing capacity... 171 Figure 84 Solar PV annual capacity additions, historical and projected by region (GW)... 174 Figure 85 World solar PV capacity, baseline and enhanced case projections... 175 Figure 86 Solar PV capacity and deployment by market segment... 176 Figure 87 Solar PV electricity generation and projection by region... 177 Figure 88 Match of PV supply and power demand for a residential/commercial customer in France.. 179 Figure 89 Comparison of self-use and self-sufficiency shares by system size and customer segment.. 180 Figure 90 Comparison of variable component of electricity tariffs and solar PV LCOE... 181 Figure 91 Comparison of profitability index of a PV system at different shares of self-use for 3.5% (bottom line) and 7% cost of capital (top lines)... 181 Figure 92 Three different models for incentivising customer-owned PV... 182 Figure 93 Historical and projected LCOEs for STE, beginning year... 190 Figure 94 STE generation and projection by region... 193 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014 9
Figure 95 World investment in new renewable power capacity, historical and projected... 198 Figure 96 Weighted average annual renewable investment costs, historical and projected... 200 Figure 97 Investment indicators: Long-term government bond rates and utility equity performance... 201 Figure 98 Indicative costs of capital and LCOEs for new onshore wind, beginning 2014... 203 Figure 99 World new investment in renewable power capacity, historical and projections... 205 Figure 100 Cumulative new investment in renewable power capacity historical, forecast and scenario analysis... 206 Figure 101 World final renewable energy use for heat (including commercial heat) 2007-20... 208 Figure 102 Total FEH in buildings and industry, 2007-12... 210 Figure 103 Modern renewable energy use for heat in buildings and industry, 2007-20... 214 Figure 104 Share of renewable energy in total FEH in different world regions, 2012... 214 Figure 105 Bioenergy heat production costs compared with electricity and natural gas-based heating... 219 Figure 106 Modern bioenergy use for heat in buildings and industry, 2007-20... 221 Figure 107 Solar thermal heat production costs compared with electricity and natural gas-based heating... 222 Figure 108 Solar thermal energy use for heat in buildings and industry, 2007-20... 225 Figure 109 Geothermal heat production costs compared with electricity and natural gas-based heating... 226 Figure 110 Geothermal energy use for heat in buildings and industry, 2007-20... 227 Figure 111 World biofuel production 2007-20... 230 Figure 112 EV stock development in different countries 2008-13 compared with ETP 2014 2DS targets for world EV stocks in 2015 and 2020... 233 Figure 113 Production costs of corn ethanol versus ethanol and gasoline spot price in the United States... 235 Figure 114 OECD Americas biofuel production 2007-20 and US biodiesel production and imports 2012-14... 237 Figure 115 EU and Malaysian biodiesel production costs versus EU diesel and biodiesel spot prices 2012-14... 238 Figure 116 OECD Europe biofuels production, 2007-20... 239 Figure 117 Non-OECD Americas biofuels production 2007-20 (left) and comparison of ethanol and gasoline retail prices in Brazil 2012-14 (right)... 241 Figure 118 Argentinian biodiesel production 2007-20 and production economics 2013-14... 242 Figure 119 Non-OECD Asia, Africa, China and Middle East biofuel production, 2007-20... 243 Figure 120 Advanced biofuel production capacity, 2013-20... 245 LIST OF MAPS Map 1 Net energy metering in the United States, status by state, July 2013... 37 Map 2 Indonesia geothermal potential... 95 Map 3 China main wind resource sites and load centre... 106 Map 4 Interconnection of GCC countries... 122 LIST OF TABLES Table 1 World renewable electricity capacity and projection (baseline case) (GW)... 23 Table 2 World renewable electricity generation and projection (baseline case) (TWh)... 23 Table 3 IEA best-practice policy principles... 25 Table 4 Economic and technical lifetime assumptions in MTRMR 2014 (years)... 26 Table 5 Central assumptions for global LCOE ranges by technology (beginning of 2014)... 27 10 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014
Table 6 Top ten US states, 2013 capacity additions (MW)... 32 Table 7 OECD Americas main targets and support policies for renewable energy... 40 Table 8 OECD Americas cumulative renewable energy capacity in 2013 and 2020... 43 Table 9 OECD Americas main drivers and challenges to renewable energy deployment... 44 Table 10 Asia Oceania countries main targets and support policies for renewable energy... 51 Table 11 OECD Asia Oceania, selected countries renewable energy capacity in 2013 and 2020... 54 Table 12 OECD Asia Oceania main drivers and challenges to renewable energy deployment... 55 Table 13 UK renewable capacity under development (February 2014)... 61 Table 14 Germany renewable deployment capacity corridors under the EEG... 66 Table 15 OECD Europe countries main targets and support policies for renewable energy... 67 Table 16 OECD Europe, selected countries renewable energy capacity in 2013 and 2020... 70 Table 17 OECD Europe main drivers and challenges to renewable energy deployment... 71 Table 18 Africa countries main targets and support policies for new renewable energy capacities.. 86 Table 19 Africa, selected countries renewable energy capacity in 2013 and 2020... 88 Table 20 Africa countries main drivers and challenges to renewable energy deployment... 89 Table 21 Thailand s renewable energy targets for 2021 (MW)... 96 Table 22 Non-OECD Asia countries main targets and support policies for new renewable energy capacities... 97 Table 23 Non-OECD Asia, selected countries renewable energy capacity in 2013 and 2020... 100 Table 24 Non-OECD Asia main drivers and challenges to renewable energy deployment... 101 Table 25 China main targets and support policies for renewable energy... 107 Table 26 China renewable electricity capacity and projection (GW)... 109 Table 27 China main drivers and challenges to renewable energy deployment... 110 Table 28 Non-OECD Europe and Eurasia main targets and support policies for new renewable energy capacities... 115 Table 29 Non-OECD Europe and Eurasia main drivers and challenges to renewable energy deployment... 117 Table 30 Non-OECD Europe and Eurasia, selected countries renewable capacity in 2013 and 2020.. 117 Table 31 Middle East countries main targets and support policies for renewable energy... 123 Table 32 Middle East, selected countries renewable energy capacity in 2013 and 2020... 124 Table 33 Middle East main drivers and challenges to renewable energy deployment... 125 Table 34 Brazil power generation capacity targets under the PDE 2022 (GW)... 128 Table 35 Non-OECD Americas countries main targets and support policies for new renewable energy capacities... 131 Table 36 Brazil energy auctions, average contracted capacity prices (BRL/MWh)... 131 Table 37 Non-OECD Americas main drivers and challenges to renewable energy deployment... 132 Table 38 Non-OECD Americas, selected countries renewable energy capacity in 2013 and 2020... 133 Table 39 World renewable electricity capacity and projection (GW)... 139 Table 40 Top five countries, projected increase in generation (TWh) over 2013-20 by technology... 140 Table 41 Top five countries, projected increase in generation (% change) over 2013-20 by technology... 141 Table 42 Bioenergy capacity and projection by region (GW)... 147 Table 43 Geothermal power capacity and projection by region (GW)... 149 Table 44 Hydropower capacity and projection by region (GW)... 153 Table 45 Ocean power capacity and projection by region (GW)... 155 Table 46 Offshore wind power capacity and projection by region (GW)... 160 Table 47 Onshore wind capacity and projection by region (GW)... 165 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014 11
Table 48 Solar PV capacity and projection by region (GW)... 172 Table 49 Solar PV deployment category assumptions in MTRMR 2014... 177 Table 50 Comparison of select distributed solar PV policy frameworks, June 2014... 184 Table 51 STE capacity and projection by region (GW)... 191 Table 52 Renewable technologies, risks and types of investors... 202 Table 53 Examples of emerging investment vehicles for renewables... 203 Table 54 OECD country main targets and support policies for renewable heating and cooling... 217 Table 55 Non-OECD country main targets and support policies for renewable heating and cooling.. 218 Table 56 Solar thermal heat installed capacity (GW th )... 223 Table 57 World biofuels production 2013-20... 231 Table 58 Global main targets and support policies for liquid biofuels... 232 Table 59 RFS2 volumes for different biofuels... 236 Table 60 Ethanol production (billion litres)... 247 Table 61 Biodiesel production (billion litres)... 248 Table 62 Total renewable electricity capacity (GW)... 248 Table 63 Renewable energy use for heat (EJ)... 250 Table 64 Total renewable electricity generation (TWh)... 250 LIST OF BOXES Box 1 Emissions reduction proposals could give longer-term renewable boost in the United States.. 35 Box 2 As deployment ramps up, US states debate rules for distributed solar PV... 37 Box 3 Transition ahead for Japan s power sector... 49 Box 4 EU renewable electricity faces challenges to meet 2020 targets and beyond... 62 Box 5 Wood pellets a niche product becoming an energy commodity... 145 Box 6 Evolving landscape for pumped storage hydropower... 150 Box 7 Why do solar PV system prices vary so much among markets?... 167 Box 8 Solar PV deployment segments vary by market... 176 Box 9 Guide to the renewable investment outlook... 199 Box 10 Cost of capital a key to reducing renewable generation costs... 203 Box 11 Renewable cooling in industry and buildings... 211 Box 12 Heat pumps: Efficient heating and cooling solutions, though not necessarily renewable... 212 Box 13 Solar thermal district heating in Denmark... 224 Box 14 Electric vehicles and renewable energy: Opportunities for synergy... 232 Box 15 IEA biofuel production cost analysis... 235 Box 16 EU long-term policy outlook... 240 12 MEDIUM-TERM RENEWABLE ENERGY MARKET REPORT 2014